Commercial Properties and your new Franchise Business

More and more it seems those who are looking to start a business are considering buying into franchise. There are pros and cons from what I have seen when it comes to moving down this road. Below are some items to consider.

Finding Commercial Property

When working with a franchise. Most of them have very strict requirements when it comes to the location. So…be preprepared for a long search. After you find a location you believe will work, the franchise normally sends out folks from their corporate office to inspect the location. The commercial agent that is helping you will normally be required to submit demographic, zoning, traffic, etc…reports to you and the corporate office.

Picking Your Agent

Most franchise will let you work with a local agent who knows the area. However, I have seen franchises who will only will allow you to work with certain companies. This would be OK if these companies are in the area you are considering. It is not a good idea if the company is not familiar with your area. For example, one of my clients was told he had to use a real estate company from Ohio to find a space in Loudoun VA. This Ohio company also wanted a non-refundable $12,000 retainer fee to help him.

There are some franchise who get a brokers license and they want a commission kick back for the property you lease. Personally I worry about these companies. This approach puts to many chiefs in the kitchen. You have the franchise brokerage, your local agents brokerage and the listing agents brokerage. Everyone has their hand out for a commission payment from the owner of the property.

Conclusion

Most franchises will allow you to negotiate the terms of your agreement with them prior to signing on the dotted line. I would consider reviewing the real estate terms prior to agreeing to work with a franchise to ensure you get the best deal and location.

About the Author

David Kamminga
David Kamminga is a commercial real estate agent in the Washington DC metro area. His services include tenant and landlord representation in land, retail, warehouse and office transactions.
He main area of service is Loudoun and Fairfax County Virginia. Some of the cities he assists with are Tysons, Reston, Herndon, Ashburn, Chantilly, Leesburg and Dulles just to name a few.